Business Objects buys Crystal Decisions

Business Objects has announced plans to acquire Crystal Decisions for approximately US$820 million in shares and cash. Once complete, the deal will see the creation of a new business intelligence solutions giant.

|~||~||~|Business Objects has announced plans to acquire Crystal Decisions for approximately US$820 million in shares and cash. Once complete, the deal will see the creation of a business intelligence (BI) solutions giant that boasts more than 3800 employees, 700 alliance partners and more than 16 million licenses worldwide.

The strategic rationale behind the deal is Business Objects’ desire to attain market leadership in the BI market, enhance its product line and increase its range of distribution channels.

“With this combination, we will seize the opportunity to take a leadership position in the BI market,” claims Bernard Liautaud, chairman & CEO of Business Objects. “The two companies are not only successful leaders in their space but have extremely complementary businesses… Together, we will become the clear choice for organisations looking to standardise on a single BI provider,” he adds.

By joining forces with Business Objects, Crystal Decisions will be able to ensure its long term competitiveness in an increasingly active BI market. Furthermore, the vendor will be able to extend its product line by integrating its offerings with those of Business Objects.

“This is a perfect fit from a product, market and cultural perspective,” says Jon Judge, president & CEO of Crystal Decisions. “In the business intelligence market, size and scale will be key ingredients to long term success. This combination will accelerate our own plans to better serve our customers by offering a broader product line and becoming a part of the new number one vendor in business intelligence,” he adds.

Gartner Group’s first take on the deal supports the beliefs of both Liautaud and Judge. Furthermore, the analyst house suggests the acquisition of Crystal Decisions will not only fill in a number of gaps in Business Objects’ product portfolio and augment its sales channels, but also enhances its stature within the BI market. “In the long term, the combination of each company’s market leading product lines creates the potential for a powerful market force,” states the analyst house.

Elsewhere, Phil Howard, practice leader at Bloor Research, also believes the acquisition is a smart move. However, while he concedes that the deal will bolster Business Objects’ product line, Howard also argues that the vendor will have to dip into the market again to compete with SAS. “Given that SAS has annual revenues measured in the billions… I don’t think that this is the last acquisition we will see,” he says.

Locally, it will take some time for the deal to have an impact. In fact, Raheel Khan, territory manager of Business Objects’ local partner, Business Strategies Group, predicts that it will be at least six months before the full force of the acquisition is felt in the Middle East. “It will take at least six to nine months for them [Business Objects and Crystal] to streamline the acquisition and we are looking for a complete merger into one company by the end of the year. Early next year we will see the impact in the Middle East,” he says.

However, once the new company begins operating in the region, Khan believes it will be able to pick up a considerable amount of business as the Middle East begins to embrace BI. “The local BI market is an emerging one… but today, people have become more knowledgeable about the capabilities of BI and what it can bring to their business… With this acquisition, local customers now have a clear market leader in the BI space to approach for their needs,” he says.

Whether this growth will stem from new business or come at the expense of competitors in the local market remains to be seen. However, Basel Tutunji, regional manager of SAS Middle East, is unconcerned by the emergence of another BI superpower and believes SAS will be able to capitalise on user concerns regarding the integration of Business Objects and Crystal’s product lines.

“The merger will educate the market as to the need for BI, which will help us [SAS] indirectly. However, we will also be able to take the business that this awareness generates because users will not want to be a part of the confusion that will surround the acquisition,” he says. ||**||